Stock ETFs Claw Their Way Higher After Fed Minutes Drop | ETF Trends

Stock indices and stock index ETFs are driving higher on Thursday after stock futures plummeted in the last hours of trading Wednesday, and into the overnight session, as the Fed Minutes stoked fears of a prolonged struggle with the coronavirus. Stocks have recovered from their worst levels, however, despite worsening unemployment numbers released Thursday.

Following a rough close to the session Wednesday, when stocks dropped precipitously into the close following the FOMC Minutes, stock indexes are attempting to claw their way back higher on Thursday. The Dow Jones Industrial Average marginally, up 05% in Thursday morning trading, while the S&P 500 added 0.19%. The tech-heavy Nasdaq Composite led the way and rallied 0.74%.

The major stock index ETFs are trading mixed to higher along with their underlying benchmarks Thursday. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), are both showing marginal gains while the Invesco QQQ Trust (QQQ) has advanced 0.84%.

After attempting to hold onto fresh highs in the S&P 500, stocks tumbled following the FOMC Minutes released on Wednesday, which revealed the Fed still had serious concerns about the effect of the coronavirus on the economy and suggested rates could remain unchanged for the time being.

“They noted that the path of the economy would depend significantly on the course of the virus and that the ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near term and posed considerable risks to the economic outlook over the medium term.

Investors seem to be shrugging off a poor labor report Thursday however, as stock initially fell after the jobless claims release but have rallied back strongly since then.

The tally of individuals filing for unemployment benefits last week was higher than anticipated, generating worries about the state of the economy, as lawmakers continue to grapple over a fresh coronavirus pandemic stimulus package.

The Labor Department said Thursday that initial jobless claims for the week ended Aug. 15 came in at 1.106 million. Economists polled by Dow Jones projected a total of 923,000. Initial claims for the previous week were also revised higher by 8,000 to 971,000. Last week marked the first time in 21 weeks that initial claims hit below 1 million.

“The modest jump is a stark reminder that claims will likely encounter some turbulence as they fall rather than gliding in for a soft landing,” said Daniel Zhao, senior economist at Glassdoor.

Meanwhile, lawmakers are still at odds over a new coronavirus stimulus package.

“It’s been four weeks without the $600/week CARES Act benefits for tens of millions of unemployed Americans,” said Zhao. “While a handful of states are approved to disburse the new $300/week benefits, it remains unclear how quickly the benefits will be able to flow to unemployed Americans already facing an unsteady recovery.”

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